Bharti picks IBM for Kenya, Africa

September 17, 2010

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By Evelyn Njoroge, NAIROBI, Kenya, Sep 17- In yet another indication that Bharti Airtel, the new owners of Zain is intent on making it mark in their new African operations, the mobile operator has announced plans to outsource its IT services to computer firm International Business Machines (IBM) to improve efficiency.

Bharti Airtel Chairman Sunil Bharti Mittal said IBM would now supply information technology services in a move that will free up the mobile operator, to deliver innovative and affordable mobile services in their new operations across the continent.

This arrangement is modeled around a similar one in India which has been successfully applied.

“For the last six years, this arrangement has been of great delight to us. We have been able to launch services ahead of competition, provide simplistic tools for our own employees and more importantly it’s been done in a more cost effective manner,” he said in Nairobi.

In Kenya, the group has already initiated a price war that has seen calling rates fall down considerably.

Zain’s African division has changed ownership four times in ten years in what has been blamed on a lack of a clear strategy on how to run the 16 operations in the continent.

With the new deal however, Mr Mittal expressed confidence that they would be able to measure how the 150 million-subscriber company is run and how customers are using and consuming these services.

Classified as the fifth largest mobile phone firm in the world, Bharti acquired Zain Africa’s assets mid last year from its Kuwait-based Group after parting with $10.7 billion.

Announcing the arrangement, the chairman said the IBM deal, which is estimated to be worth Sh80 billion ($1billion) would be officially sealed in a few weeks as finer details of the contract were still begin worked out.

The focus on Africa he said was driven by the realisation that the continent was the next frontier for businesses and presented opportunities for them to make good return on their investments.

IBM Chief Executive Officer Samuel Palmisano added that the partnership with Bharti would enable them to transform the lives of millions of people in Africa just like it has in India.

“We are here to create new businesses not only for the masses but also for farmers, youth and Small and Medium Enterprises. We are also here to inspire people to communicate more because we believe affordability is crucial,” Mr Palmisano said.

The two companies said they would exploit the huge potential that exists in Africa to grow their business. Statistics show that 40 out of every 100 Africans have a mobile phone although the demand is growing at an average of 25 percent annually.

The growth of the telecommunications sector has also been shown to have a corresponding effect on the economy with studies showing that a 10 percent rise in mobile penetration could increase Gross Domestic Product by 1.2 percent in developing markets.

This is a situation that Bharti is seeking to capitalise on and has indicated the operator’s intention to acquire more firms in Africa to enable them drive this agenda.